“Always Be Closing” - banks, probably

Quick Hits from GRIT

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SIX things you need to know this week in 60 seconds.

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This clinical stage biotech is making a splash on the NASDAQ. Shares of Cardiol Therapeutics are up over 20% since listing earlier this month. What’s Cardiol’s edge? They’ve developed an ultra-high concentration CBD treatment to fight heart disease*.
*as of 4pm ET, 9/9/21
1. MACRO

At what point do we stop calling them bottlenecks?

The Logistics Managers’ Index is at 73.8 — its 5th highest month on record. Supply chains have been experiencing “bottlenecks” for about a year now and at this point, we should just call them inefficiencies.

The pandemic has exposed weaknesses in every part of the supply chain: inventories, warehousing, transportation, routing, flexibility, etc. What’s the most obvious solution to all of this?

Machine-learning and automation.

According to an EY survey, 52% of supply chain executives say that the autonomous supply chain is either here or will be here by 2025.

GRIT’S TAKE: The average 40 ft. container now costs over $10,000 which is more than 5x 2020 rates. Autonomous supply chains are the next big investment theme.

GRIT’S ACTION: I have owned Kinaxis (KXS-T) for +5 years. In a nutshell, they add ‘digital’ WD40 lubricating your entire supply chain. They use predictive data for better purchasing decisions, cut down on delivery time and increase efficiency. Like moving from dial-up modem to 5G.

2. DEALS & IPOs

“Always Be Closing” - banks, probably

US mergers & acquisitions deals hit $1.8T over the first 8 months of 2021. Worldwide, that number jumps to $3.6T and is expected to break 2015’s record of $4.3T by year’s end.

Goldman Sachs has been the biggest winner throughout the spending frenzy, collecting over $1B in fees from the deals in each of the last 3 quarters. They’d only topped a billion in a single quarter one other time in the last 10 years.

Revenues from M&A activity aren’t stopping any time soon either. You see, banks are paid once a deal closes, and there are a lot of big transactions pending.

GRIT’S TAKE: The IPO pipeline is packed with 90-110 companies expected to go public over the next four months. Some of those names include Allbirds, Warby Parker, Authentic Brands, Fresh Market, Chobani, Sweetgreen, Instacart AND…

GRIT’S ACTION: Impossible Foods which I am long!

3. STOCK MARKET

The Shiller P/E Ratio couldn’t hit water if it fell out of a boat

In the last 40 years, you would have had a buying window of ~7 months if you were a value investor who only bought stocks when the Shiller P/E was below its average.

7 months in 40 years!

Tren Griffin has a few tweaks for what some consider the “Holy Grail” of indicators that might help paint a better picture:

  • Adjust for the rise in intangible assets

  • Adjust for lower interest rates

  • Use cash flows instead of earnings

GRIT’S TAKE: There’s nothing wrong with having the ratio in your stock-evaluation toolbox but using it as your North Star might get you lost!

GRIT’S ACTION: Listen to Tren Griffin.

4. COMMODITIES

Record demand for oil in the U.S.

Demand for oil in the U.S. made a fresh all-time record at the end of August. Gasoline and jet fuel demand led the way, but both are still under pre-pandemic levels.

So — demand is high and we still have not seen roads and airlines at full capacity, which means there’s room to grow!

Meanwhile, the White House continues to push OPEC+ to increase output, but the cartel is staying the course despite raising its forecast for 2022 demand by 28%.

GRIT’S TAKE: Demand for the lesser-known oil-based fuels like propane and “other” oils used in petrochemicals was also at or near record levels in August.

GRIT’S ACTION: Made +30% on my energy holdings. Will let you know when I see another entry point.

5. CRYPTO

Salvadorean “Bitcoin Day” gets ruined by SEC vs. Coinbase beef

Tuesday was supposed to be a very special day for El Salvador as it became the first country in the world to adopt Bitcoin as legal tender. Instead, it was met with a swift kick to the metaphorical groin, with its new national currency taking a swan dive after some “sketchy behavior” out of the SEC regarding Coinbase’s new lending program (aptly named Lend).

It’s worth reading the entire thread, but here’s the lite version:

  • Coinbase wants to let people earn from lending their crypto (just like BlockFi, Binance, and others with similar existing products)

  • The SEC/Gary Gensler threatens to sue Coinbase if they even think about it!

  • The question of what qualifies as a ‘security is debated vigorously by Fintwit

  • $COIN shares tumble

  • Coinbase just wants some freakin’ guidance!

Some industry analyst thinks this is a part of a broader move by the SEC who they suspect might be targeting other crypto firms offering these types of products.

GRIT’S TAKE: Do you think President Bukele was phased by any of this FUD?

GRIT’S ACTION: Long Bitcoin and now Ethereum (found my entry point ; )

6. ENTERTAINMENT

Kim Kardashian’s laser vision is askew

The U.K.’s Financial Conduct Authority has asked companies like TikTok Twitter, Facebook, Microsoft, and Google to commit to stop promoting financial ads that push speculative products (aka cryptocurrencies).

FCA Chair, Charles Randell, had a special message for fans of Kim Kardashian in particular:

“you should be prepared to lose all your money.”

He was referring to a post Kardashian made back in June where she asked her measly 250MM Instagram followers to join the Ethereum Max Community.

She disclosed that it was an “#AD” but she didn’t mention that Ethereum Max was in no way related to the second-largest blockchain network in the world — actual Ethereum.

GRIT’S TAKE: So did investors lose all of their money as Randell said they might? See for yourself!

GRIT’S ACTION: Long Bitcoin and Ethereum. Stick to the OGs.


Under the Radar
Did you know drones are for more than just cool Youtube videos? Draganfly is the award-winning, industry-leading drone solution that’s bringing real-life changes to enterprises around the world. And they’re doing it fast, with revenues increasing 114% YoY! Best part? Shares have just begun trading on the NASDAQ*!
Don’t let your client’s cannabis business go up in smoke because the green is cashed. Canna Business can get them $5M in working capital in 48 hours! They can also help with real estate, equipment, and invoice financing*.
Hyperledger & Ethereum just got put on notice. A big increase in large blocks being routinely processed has catapulted TAAL onto the blockchain mainstage. BSV now producing more transactions per day than Ethereum and BTC ! They just reported Q2 revenues of $6.7M (almost 7x quarter-to-quarter), and they’re expecting to exceed results again in this quarter*!
Transaction per day:
Bitcoin SV: 2.3M
BTC: 264K
BCH: 84K
ADA: 75K

*SOURCES
1. Bloomberg, EY
2. WSJ, CNBC
3. Nucleus Wealth, Twitter
4. Bloomberg, Reuters
5. WSJ, Washington Post
6. CNBC
*This is sponsored content.

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